Sahil_BSBFIM601.docx

Assessment 2 Part 1 R ev i ew , an d an a l y s e th e f o ll o wi n g d o c um e n t s : a. Extracts of LRG Business Plan and Policies in Appendix A b. H i s t o r i c a l f i n a n c i a l i n f o r m a t i o n f o r L i be r t y R e s t a u r a n t G r o u p i n A ppe n d i x B , i n c l u d i n g : o Profit and Loss statements for the previous two years for both Melbourne and Cairns restaurants o Operating Cash Flows for the previous two years for Melbourne restaurant c. Readings in Appendix C Using the readings in Appendix C, research and answer the following question: a. Calculate the Operating Expense Ratio (rounded to 2 decimals) for both restaurants for the previous two years. Then, comment on the following: i. I d e nt i f y ( a nd s ho w t he c a l c u l a t i o n) o f t he Y - 1 an d Y - 2 O pe r a ti n g E x p en s e Ra ti os for both Melbourne and Cairns in the following table: Operating Expense Ratio (Year Y-1) Operating Expense Ratio (Year Y-2) Melbourne 0.88 0.87 Cairns 119.7% 108.8% ii. What is the trend of the ratio for restaurant? Has it improved? The ration is improved for both restaurants in year Y-2 but the improvement is very minor. iii. Interpret the ratio for each restaurant from a profit/loss perspective. Melbourne restaurant is making profit as the ratio in below 100% , on the other hand cairin restaurant made the loss because the ration is more than 100%. d. Research how sales and expense growth rates impact profits of a business. Then, calculate the growth rates of Total Sales and Total Operating Expenses for both restaurants, and comment on how they have affected the Net Profit/Loss Before Tax in Year Y-2.Organise your analysis in the following table:

Growth Rate (Year Y-2) over (Year Y- 1) Comments Melbourne Total Sales 5.88 Sales growth is high than operating business. Total Operating Expenses 4.90 Cairns Total Sales 37 Sales growth is high than operating business Total Operating Expenses 23.47 e. Research how Accounts Receivable and Payable affect cash flow, then Analyse the Operating Cash Flow for Melbourne and respond to the following: i. What is the Net Cash from Operations position for Melbourne in Year Y-2? What are its implications? Has it improved from Year Y-1? The net cash from operation is negative which means there is net outflow of cash. The condition is improved in contrast to year y-1. ii. How have the change in Accounts Receivable and Accounts Payable during Year Y-2, affected the operating cash position for Melbourne in Year Y-1? The decrease in Account payable will decrease the cash in hand from previous year as the restaurant made payment to the supplier. Similarly, decrease in account receivable will increase the cash in hand. iii. I d e n t i f y t w o a c t i on s P e s t o’s c a n t a k e t o i mp r o v e i t s c a s h p os i t i on . Delay all cash payments Collect all money at the date Part 2 Access and review the extract of the Business Plan in Appendix A, then answer the following questions:

Conference room 14/05/2019 $990 Total $8.980 ii. Which overdue invoices qualify for a letter of demand from the accounts manager, cautioning the client that recovery action will be initiated if outstanding invoices are not paid immediately? I d en t i f y c li en t s an d i n v o i c e d et a il s i n t h e t a b l e be l o w , an d c a l c u l at e t o t al am o un t owing. Client Date of Invoice Amount Raymonds 12/03/2019 $4.200 Seminars 19/03/2019 $690 Conference room 17/04/2019 $900 Total $5.790

Part 4 iii. Which overdue invoices qualify for hand over to and external debt recovery agency? I d en t i f y c li en t s an d i n v o i c e d et a il s i n t h e t a b l e be l o w , an d c a l c u l at e t o t al am o un t owing.

• Directors are to act within the prescribed limits. • Use company name and Act on all public documents, business premises, cheques and Asc lodged documents. • Large companies must have their financial statements. • Public companies must have their financial statements audited. Part 5 a. I d en t i f y f o u r p er f o r m an c e i ss u es o f t h e L i b er t y I T s y s t em . • System is very complicated and take time to learn • Doesn't provide sufficient analysis for future forecast • Hard to make spreadsheet of for better understanding financial position • Doesn't create chart which make it difficult to compare data with old reports b. Research commercially available restaurant management software and select two commercially available software titles (software) for comparison against the capabilities of the existing Liberty IT system, and against the prioritized requirements of the organisation. 1- KOUNTA Designed specifically with hospitality in mind kounta POS makers no compromises for straight. It’s flexible to all different types and size of business. Behind the scenes is a security hardened database of all your most valuable data. You get the same kind of big business reporting happens. And it’s run on anything’s, IPad, android, Pc. 2- Jolt- Jolt is tablet based software used to manage daily operations for brands like Mcdonald's, buffalo wide wings. Owners and manager get a real time look at daily operation from their phone, and in store tables keep staff accountable and on task. c. Select the most suitable restaurant management software for Liberty Restaurant Group and provide a reason for your choice. MENUMIZ will be best choice of IT system for Liberty Group. This IT software can link all the restaurant system in one software. This system also provide quick and reports and chart for tracing financial position. This system can also be view by mangers in the phone app so that they can track all the performance anytime and anywhere.

Section B Budget St Kilda Cost Centre: Melbourne Budget period: Y-3 Q1 Budget (Year 3) Q2 Budget (Year 3) Q3 Budget (Year 3) Q4 Budget (Year 3) Sales Restaurant beverage sales 77,000 96,250 1,15,500.00 96,250.00 Restaurant food sales 1,08,000 1,35,000 1,62,000.00 1,35,000.00 Catering sales 50,600 63,250 75,900.00 63,250.00 Total Sales 2,35,600 2,94,500 $3,53,400.0 0 $2,94,500.0 0 Operating Expenses Food and beverage cost (direct cost of sales) 1,09,140 1,36,425 1,63,710 1,36,425 Advertising 5,000 5,000 5,000 5,000 Bank Service Charges 258 258 258 258 Credit Card Fees 258 258 258 258 Insurances 6,180 6,180 6,180 6,180 Payroll 60,255 60,255 60,255 84,357 Professional Fees 1,288 1,288 1,288 1,288 Rent or Lease 15,000 15,000 15,000 15,000 Hospitality Supplies 3,708 4,635 5,562 4,635 Licenses 1,648 1,648 1,648 1,648 Utilities and Telephone 3,090 3,090 3,090 3,090 Equipment Leases 4,635 4,635 4,635 4,635 Maintenance 734 734 734 734 Software system update 4,340 Total Operating Expenses $2,11,193.0 0 $2,43,744.8 8 $2,67,616.8 8 $2,63,506.8 8 Net Profit Before Tax (EBIT) 24,407 50,755 $85,783.13 $30,993.13 Corporate Taxes 6,956 14,465 24,448 8,833 Net Profit (or Net Income) 17,451 36,290 $61,334.93 $22,160.08

A retailer's or a manufacturer's cost of goods sold is another example of an expense that is matched with sales through a cause and effect relationship. However, not all costs and expenses have a cause and effect relationship with sales or revenues. Hence, the matching principle may require a systematic allocation of a cost to the accounting periods in which the cost is used up. If the future benefit of a cost cannot be determined, it should be charged to expense immediately. o Account Groups : An account group is a named collection of accounts. CSA uses account groups in financial statements to increase their flexibility and to enable you to use a financial statement for multiple clients. Some account group names are pre-defined, but account group definitions are client specific o Time periods: The time period principle is the concept that a business should report the financial results of its activities over a standard time period, which is usually monthly, quarterly, or annually. Once the duration of each reporting period is established, use the guidelines of Generally Accepted Accounting Principles or International Financial Reporting Standards to record transactions within each period. You must include in the header of a financial statement the time period covered by the statement. For example, an income statement or statement of cash flows may cover the "Eight Months ended August 31." However, the balance sheet is dated as of a specific date, rather than for a range of dates. Thus, a balance sheet header might state "as of August 31." F. Internal Controls to Improve Risk Management To manage risk well, you should: • promote the view that we are all risk managers and encourage staff to develop risk management skills • integrate risk management practices into everyday business activities • identify potential risks and develop mitigation strategies • Escalate risk that cannot be managed at your level of authority. • Review the government’s Guide to risk management. Internal controls Sound management of internal business controls ensures the integrity of business information. Managers need to be aware of the government’s financial accountability handbook. This provides guidance on designing and implementing internal controls and systems. When promoting and managing internal controls, you should: • Contribute to the annual management assurance report to clients by completing regular compliance checklists for relevant internal controls. • implement strategies to improve the performance of the control environment • make the outcomes of compliance checks and evidence of corrective action available to internal audit • promote awareness of your team’s business continuity plan • contribute to the review of business continuity plans • regularly refresh training in information security

• determine an authorising system and physical access requirements for your staff • Ensure information security risks are identified, assessed and managed. The modified internal controls that could improve risk management for the company are: • We need to follow rules and regulations • Also, we must apply and implement all the procedures • The time sheets and operating hours should be noted too. Project Report on Finance A. Issues: • The issues include the high expenses for cleaning and wages of the employees. • The existing software was unable to meet the expected results. B. Variances: • Variance report: variance is the difference between a budgeted, planned, or standard cost and the actual amount incurred/sold • The variances might have occurred due to over budgeting or underestimation. The forecast was based on the previous data analysis. The customer trend and technologies might have considered while budgeting. C. Financial Performance: Financial performance is a subjective measure of how well a firm can use assets from its primary mode of business and generate revenues. The financial performance is as per the budget variance report. Report type Monitoring/ reportin g frequen cy Personnel responsible Reporting dates (Q1 – Q4) Balance Sheet Monthly Accounting Specialist 2th of every month Cash Flow Analysis Quarterly Accounting Specialist 5 th of Jan, Apr, Jul. Oct Income Statement Quarterly Accounting Specialist 5 th of Jan, Apr, Jul. Oct D. Recommendations for financial Viability of the organization: 1 Viability is reviewed in conjunction with the provider’s business plan, its financial policies and procedures, and its financial strategies for the future. Once registered the provider must demonstrate ongoing compliance with this performance outcome. The sources of evidence to demonstrate capacity and evidence which will be used to demonstrate compliance. These sources are not intended to be prescriptive or exhaustive and the provider may use to alternative business evidence or data. • Financial viability is important for organizational survival and growth. New and emerging financial software should be introduced

employees. • The existing software was unable to meet the expected results. Variances: • Variance report: variance is the difference between a budgeted, planned, or standard cost and the actual amount incurred/sold • The variances might have occurred due to over budgeting or underestimation. The forecast was based on the previous data analysis. The customer trend and technologies might have considered while budgeting. Reviewing the current financial management software • Check the robust feature set of the desktop with the accessibility of the cloud, letting you access and store data in the cloud and perform others tasks in your on-site PCs. Introduction Recommendations for reviewing the effectiveness of existing financial management approaches You should regularly monitor the progress of your business. On a daily basis, you should know how much money you have in the bank, how many sales you’re making and your stock levels. You should also review your position against the targets set in your business plan on a monthly basis Body Ensuring systems are in place to record all transaction • Keep all original documents and date all correspondence. • Record all transaction dates and payment amounts. • Save all online financial transactions by month and financial year in your inbox and in a separate folder on your hard drive. Maintaining an audit trail and complying with due diligence • Backup all electronic records on an external hard drive or other storage device other than your computer's internal hard drive. • Capture nearly all of your income and expenses in statements from both your bank and credit card accounts. • Request that all statements and bills be sent on a monthly basis - allowing you to reconcile all financial records each month. Conclusion Viability is reviewed in conjunction with the provider’s business plan, its financial policies and procedures, and its financial strategies for the future. Once registered the provider must demonstrate ongoing compliance with this performance outcome. The sources of evidence to demonstrate capacity and evidence which will be used to demonstrate compliance. These sources are not intended to be prescriptive or exhaustive and the provider may use to alternative business evidence or data. • Financial viability is important for organizational survival and growth.

Licenses 1,648 1,648 1,648 1,648 Utilities and Telephone 3,090 3,090 3,090 3,090 Equipment Leases 4,635 4,635 4,635 4,635 Maintenance 734 734 734 734 Software system update 4,340 Total Operating Expenses $2,11,193.00 $2,54,244.88 $2,95,966.88 $2,98,099.88 Net Profit Before Tax (EBIT) 24,407 40,255 $57,433.13 -$3,599.88 Corporate Taxes 6,956 11,473 16,368 - 1,026 Net Profit (or Net Income) 17,451 28,782 $41,064.68 -$2,573.91